Chesapeake, which is the largest oil and gas leasehold owner and most active driller in the US, has bought around $900m in royalties in the past ten years, and is looking to accelerate the pace of its acquisition of royalties through the deal with KKR.
The two parties have agreed to commit an initial amount of $250m to the partnership, 90 per cent of which will be provided by KKR. Chesapeake will source, acquire and manage the royalty investment opportunities.
“Driven predominantly by the recent advancements in unconventional oil and gas technology, we continue to see attractive opportunities to invest behind the domestic exploration and production of oil and gas,” said Robert Antablin, a director at KKR.
“Royalties represent an important extension of this opportunity set and offer an attractive risk/reward for our investors in the current environment.”
The deal will further strengthen KKR’s portfolio of energy investments. In November last year the firm and a consortium of investors also agreed to buy a majority stake in oil and gas producer Samson for $7.2bn.
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